The Compound and Friends - The Butterfly Effect

Episode Date: July 23, 2021

On this week's episode of The Compound & Friends, Michael Batnick, Packy McCormick, and Downtown Josh Brown discuss: launching a VC fund, pre-IPO shares, investing in Chinese tech companies, out of control work calendars, making every day payday, the dark side of the internet, Axie Infinity, NFTs, and more! This episode is brought to you by Masterworks. Visit https://www.masterworks.io/compound to skip the 10,000 person waitlist. Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: https://ritholtzwealth.com/podcast-youtube-disclosures/ Hosted on Acast. See acast.com/privacy for more information. Learn more about your ad choices. Visit megaphone.fm/adchoices

I knew this was going to happen. Pac, this f***ing post that you just did is like the longest thing I've ever seen in my life. It's 8,200 words or something. Is that the longest thing you've ever written? Probably not. No? No, I wrote a piece on something called Senius that was 11,000 words. Like, what sort of feedback did you get on this piece?

Great feedback. Do you get feedback from your inbox? Or mostly Twitter? Inbox, Twitter, I have a feedback thing at the bottom I get feedback everywhere it was so deep I thought I was deep and then it went 14 more miles and I bailed what was so deep

his latest post was like literally like went to the core of the universe core of the metaverse. That's right. So, but now you have all this pressure because your fan base is like big. So now do you feel like every, uh,

substack you write, like every, why do I call them substacks? I don't know. I saw, I was just thinking, it's like when people say, did you write a blog?

No, I wrote a post. Do you feel like every post that you write has to meet the prior post in quality? Can you be inconsistent and just like let it fly? I mean, I never let it fly. I know that some posts are just not going to be as good as other ones. Ones that I think are shit end up being some of the most popular ones. Forget about audience reaction.

I'm just saying like in your own head, are you like, this isn't good enough. I have to do more or no. I'm always spending, you know, four days just heads down doing as much as I possibly can. But I'm mostly writing until deep on Sunday night, waking up and editing all morning, like five a.m. or five a.m. Monday. I thought you had 13 days in your week. I wish I had 13 days in my week. But at some point, the pencil has to drop.

Well, so that's a whole other conversation. It's like, how much of your own shit can you even cut? Because my words are my babies, and I'm the worst editor on Earth. My brother edits me when I can. And so he's phenomenal at cutting my stuff. But yeah, I don't know. I mean, some weeks I know are're going to be bigger than others. Right.

But as long as interesting stuff keeps happening in the world. Hey, if you go to a party or whatever, I don't even know why I said party. If you meet somebody and you're with your wife and another couple and the guy's like, oh, what do you do? Newsletter writer. Is that it? I mean, kind of. You're a venture writer. You're a venture capitalist. Thinker.

I do get feedback like this. I'm looking at my feedback here. I'm a thinker. Oh, my God. I'm a thinker. I'm a thought leader. This is a piece of feedback that I got this week. I'm actually a think-splainer.

A lot of marketing speak, faux humility and self-righteousness. Wow. Somebody said that to you? Yeah. Dude, give me that IP address. We don't know their IP address. This is a user leap survey. You need some absolute world-class trolls

because you're doing too well. So you need people to bring you back down. Hell yeah. Well, if nobody trolls you, then nobody cares. That's the other thing. True. That's also such a shit comment.

Imagine, you would never in a million years take the time to write that to anybody else like who does that i mean we'll talk about people on the internet but it does just expose that there are people like this and these people before would not have had any friends they wouldn't have had a platform they would nobody would listen to them friends they still don't have friends but anybody built a platform though because i'm i'm not a troll like i don't like to upset people, but I think I'm like, I think I have like insights about every business that I interact with that might be helpful. And maybe this is just because I'm insane,

but has anybody built a platform that's like a suggestion box for every business where I can just write 50 words and then the website finds a way to deliver it to the owner of that business? Because I have like micro things that I noticed. This sounds insane. You sound like a crazy person.

I know I do. No, but every interaction I have with like a business, like big ones, small ones, I'm like, oh, these idiots, they don't get it. Josh can make everything better. Yeah. Even like what they name their stores. I'm like, ah, it's not going to work. He is the best namer of all time.

Oh yeah? Of all time. Oh, yeah? Of all time. Dude, this guy opened a sandwich shop. It was a Subway. He was the franchisee. He threw Subway out. He discontinued, and he put up his own sign. Long Island?

Dude, lawn. Two words. Lawn. Guyland. Subs. I think it was three words. I think it was lawn. Was it lawn? No, it wasn't. Yeah, yeah, yeah. That's what I mean. Was it literally lawn? Lawn, two words, lawn, guyland, subs. I think it was three words. I think it was lawn. Was it lawn?

No, it wasn't. Yeah, yeah, yeah. That's what I mean. Was it literally lawn? Lawn, guy, land? Like in other words, it's like the way we get made fun. Nobody thinks that's funny. Nobody wants to eat any shit that comes out of a store that says that.

They shut him down. If I had- No, Subway came in there. He was like, dude, what are you doing? No, he went out of business and then Subway came back or maybe he no way Subway was like dude

you just changed the name it's all franchises Subway doesn't walk in and take people's delis stop stop there's no Subway mafia Jared does it himself

now it's his punishment let's say there was like a service let's say there was a service a suggestion box where I could go on this platform and the platform

could get word to him. Hey, idiot. Nobody thinks your sign is funny. What would you call her? Yup. I don't know if he was on. Yeah.

What would you call it? What would you call sandwich shop? You're good at this. Come on. Oh, I don't, don't put me on the spot, but it would definitely be better than long guyland subs.

So bad for sure. All right. You look, you look like you're itching to get this going. Big John. This is the official start of the show, guys. Packy's feeling the theme music. I'm feeling the theme music.

Fat Mac, you feeling theme music? I'm kind of nervous. He's not really a music guy. I'm like a bobbing my head guy. I've seen you a little bit get into it, though. Duncan's in the house. Duncan Hill, say hello to everybody. Hey, everyone. There he is. It's on. All right. You can hear me. Big John's in the house. Thanks, John.

Welcome to the Compound and Friends. All opinions expressed by me, Michael Batnick, and our castmates are solely our own opinions and do not reflect the opinion of Ritholtz Wealth Management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Ritholtz Wealth Management may maintain positions in the securities discussed in this podcast. in the securities discussed in this podcast.

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So excited to have you back. Welcome to week eight, or I should say episode eight of the Compound and Friends. Probably the best financial podcast ever. I know it's being debated right now, but I would just weigh in on the side of it being the best financial podcast ever. I know it's being debated right now, but I would just weigh in on the side of it being the best. We have a lot of fun doing this and we have great guests who are friends of ours in real life

and we actually really want to talk to. And Paki was on episode one and I think you've been practicing. So like this time you should like actually be good to go. I got my first barber haircut, like not shaving my own head this afternoon. That's how seriously I'm taking this. All right, so you're very bougie now.

You launched a venture capital fund. This is the first thing we want to talk about because I'm fascinated by it. I'm not in that world, but I read about it all the time and I have a lot of friends that are, and I just love it. And I'm curious about it.

I'm skeptical of it and everything in between, but you launched a fund. We're proud of you. Do we have a round of applause? Hell yeah. Throw it out. There we go. Oh my God. Thank you. Louder. All right, dude, it's amazing. Wait, so this is your, but this is your first time managing money for outside people. This is my first time managing money for outside people. Are you sleeping? I am not sleeping. I mean, so there is the writing schedule, which is ideally I lock myself in a room and think and write and that's it.

And then there's the venture capital schedule, which is this founder wants to talk to you for 15 minutes at 8.30 and then again at 3.30 and you have to take those calls. And so the two schedules are kind of tough. So the writing ends up happening in the morning, at night, when the baby's asleep, on the weekends, all of that. So not much sleep. So this is like a big deal.

You've got some like serious people. You could brag here. People are interested. Let me just brag for you. Okay. You've got – this is public now. You've got Marc Andreessen and his partner, Chris Dixon. You have Michael Batnick.

Like you have real investors. Wait, are you an LP? Yeah. Are you breaking his balls all day? Are you asking for updates? Yeah, exactly. In venture companies? I did write one update and I got a bunch of feedback that it was the longest update

that any of my LPs have ever gotten, which is I think pretty on brand. But yeah, no, I mean, it's been really cool. I think a lot of people hate fundraising, whether that's founders, whether that's people raising funds. I've had a blast with this process. It's different for you. I think a lot of people hate fundraising, whether that's founders, whether that's people raising funds. I've had a blast with this process. It's different for you.

You're not working with consultants and Wall Street firms and Cap Intro. These are friends and fans. That's how we raise money. So you're in a different league than all the people that complain about the fundraising process. of complaint about the fundraising process. Are you the first person, like this is like a new field where you went from newsletter writer to venture capitalist in like 36 hours? Like, are you the first? Like, is this, this, and it sounds like you're, you're not going to be the last. Like this is now, this is now like a real model that people are going to follow. Yeah. So I think the content creator of some sort to investor thing is a well-trodden path.

So Turner Novak's a guy who did it. He makes memes, but he also writes, and he's a really good writer. He's written great stuff on Snap and Pinduoduo and a bunch of other companies and drops fire memes. And that's how he gets to founders, right? Like that's how he gets noticed. And then they realize, oh, this guy's really smart.

And all of those kinds of things. Lee Jin was already at Andreessen Horowitz, but kind of wrote the post defining the passion economy. She raised a fund to invest in the passion economy. So there's definitely a few like this. And then on the other side, Andreessen obviously has done a bunch on the media side. They just launched Future,

which is their own kind of publication. And so I think more and more and more people are realizing that these two things go together really nicely. Just from my own personal perspective, all of my deal flow in one way or another comes from the newsletter, whether that's a founder reads it, whether that's I've written about a certain topic that somebody is building in, whether that's an investor reads it and intros me. It all comes from the newsletter. And it's a good way to just kind of think and explore different spaces. It's the most organic thing on earth. I mean this is how we built our business.

It's inbound. Our first 200 clients were readers of Barry's The Big Picture blog. He didn't start the blog saying, I'm going to own an RIA someday. It's a natural, organic fit that if somebody becomes a fan of your writing and your philosophy and what you're saying, and then you say,

not only do I want to talk about this, but I actually will do it for you. It's completely organic. It's not like you're like, oh, I write this sub stack about tech. And then also I'm doing like, I'm doing like, I'm making my own horseshoes and you should let me, you know,

do horseshoes for your horses. Like it's, this is like as organic as it gets, I feel like. It fits totally well. And a lot of people are like, oh, you know, do horseshoes for your horses. Like it's, this is like as organic as it gets. I feel like it fits totally well. And a lot of people are like, oh, you know, venture is the monetization engine for tech sub stack. And like, certainly, you know, if this goes well, it'll make money and all of that. But I think the really cool thing for me, having come from working in finance and working at a company, I don't like to just sit there and write and just say like, oh, here's what's wrong with the company or here's what's right about the company and not put some skin in the game and not like actually kind of get involved and back the companies and help them and all of that.

So I really love the marriage of those two things. So reading the – your first letter, which I thought was a perfect – just a chef's kiss amount of length. It was just perfect. Thank you. There's like – I mean there's 30 companies that you just started. How? Like how did you do all of this in such a short period of time? So there were 20 investments in Q2.

And I really kind of started raising and committing money out of the fund at the same time before there was even a dollar in the bank. I was like, here, take my money, but hold off. I'll actually wire it to you in a couple of weeks. So it was about a quarter, and there were 20 investments. actually wired to you in a couple of weeks. So it was about a quarter and there were 20 investments in July, probably at 16 already, which sounds absolutely insane. What do you mean? Dude,

it's July 22nd. I know. Uh, which I mean, and some of those like clothes, but they were happening last to pack. He's due diligence. He's

I'm just kidding. It's all algorithmic due diligence. What you're doing is angel, pre-angel almost. So it actually makes sense to do it that way. Talk about like where you are in the company's evolution. Like, are you investing at the level, at the stages that you thought you would be? Is it earlier?

Is it later? So I thought that I was going to be investing, you know, kind of 20% pre-seed. And so by pre-seed, I mean, there is maybe a live product, maybe a couple of customers, sometimes an idea and a deck. I don't think I'm smart enough, so I don't do a ton of investing there

unless I really, really know a space or the particular founder already really well. I thought I'd be doing 20% late stage. And by late stage, I mean like the valuation is north of $250 million, so like growth stage. And then I thought I'd be doing the bulk in the middle. And pretty much it's ended up being in that range. So a lot of smaller funds, like the fund will be like $9. And then I thought I'd be doing the bulk in the middle. And pretty much it's ended up being in that range. So a lot of smaller funds,

like the fund will be like $9.999 million. A lot of smaller funds just stick to pre-seed because you can own more of the company and all of that. I think that's kind of BS for a fund of this size. And when I'm not leading and all of that, like I kind of want cash on cash returns here. And so the way that I'm thinking about it is there's going to be some early pre-seed bets that work really, really well. There's going to be a bunch

of late stage ones. Like I invested in Scale AI, which is a $7.3 billion company. That's the most expensive one that I've done. That is a likely kind of three to five X, right? Or potentially more, but likely three to five X. And so higher floor, lower ceiling from a returns perspective. And the middle is where hopefully you get a few like kind of 100X type companies. And the goal is to make the whole fund return kind of 5X. I heard this guy Gringa talking from – was it FJ Labs? He's like seed round for Alibaba. Like he's like a –

You get one of those. He's like a godfather. But he builds himself. I think he calls it stage agnostic yep like it's a good idea or it's not and if i'm late or if i'm early whatever that's not the most important thing and i mean if you look back right like you invest in facebook at 10 billion dollars which both seems late and absolutely insane at the time to invest in facebook at 10 billion dollars yeah and that has returned 100x at at this point right like So I think personally, I'm staging an analysis.

If you get in the right company, just get in that company and it will return for you. So a couple of things that you did that I thought was really admirable. Because you're trafficking in a world where like the Andreessen people are talking to you. But you reserve spots for readers of your – and I don't know if they're also venture capitalists already or not. I'm sure they're accredited at least. But just the idea that you want to bring people with you I think is really admirable. Thank you. I mean that's – so the response from that was crazy.

So I sent this out. I thought I was – I had about $2 million left. You need to stay under $10 million if you have over 100 investors. So I had about $2 million left in, you know, you need to stay under $10 million if you have over 100 investors. Yeah. So I had about $2 million left. I thought I'd maybe get half of that, maybe get two and fill it out. 600 people submitted $28 million worth of interest. How much for that?

600 people, $28 million total interest. So why didn't you just say yes and restructure the fund? Was it just too much work to do that first time out? So I said in the letter, and I think this is true, I would much rather flex on speed of fund. So, you know, traditional fund, you'll raise, you'll deploy it over two to three years. I would much rather keep it in that kind of $10 million range and do it every nine months, for example.

But that means that... So you could have a second fund instead. Well, you can have a second fund and all of that, but like a $100,000 check could return the fund in this case. Whereas if I had a $25, $50 million fund, that wouldn't be the case. And then I'd have to go into every conversation and not just convince them to let me invest,

but also say like, hey, you need to kick out five other people because I need to get $250,000 worth of allocation. Or think bigger. Or think bigger or like dilute yourself more. It's easier to just get a $100,000 check in and up and down depending on round size. And so I want to get a $100,000 check in and up and down depending on round size. And so I want to have a fund size that that check can be meaningful.

You also put a bounty out for good ideas in the form of a carry split with any of your readers who are like, hey, I know this company or I know these guys building something. So you're almost like incentivizing your now very vast readership to bring you stuff, which is genius. I mean that should be a big part of your appeal is that you have this two-way dialogue with smart people. I mean the only reason I'm able to do this whole thing is because people read and share and interact with Not Boring. And so to then say like, thank you so much for all of your attention and like the hours it takes to read these pieces. I'm going to go get rich now. See you guys later.

So I want to involve, you know, the audience and the readership as much as humanly possible in this because this is, and this is not like, you know, somebody gave me a comment. I think on that post probably that there's like false humility and this is not false humility. Like I'd never in a million years thought that I'd be running a venture fund. And so the fact that like I am even able to do this, I want to kind of just lean into that advantage that the audience. Okay. So while you funded 70 or 80 companies in the last couple of weeks, the global funding to startups, we've all seen this chart. John, I think you probably have this one from, uh, from Michael's article. It's from CB insights. It's $156 billion in a quarter. So it's hilarious. Which like breaks every record on record. I don't mean there's only one quarter, which is even close, which was the first quarter of this year. We know that the money supply just generally is the driver of this. In

addition to there being a lot of exits from all these SPACs and IPOs, people actually got their cash out of other deals and they're not going to sit there and they're not going to put it into treasury bonds. So we understand like the, so let me just straight up ask you, is there too much money or will you know there's too much money

when there were just no companies to fund because they're all set? Like, how does that work in your mind? Probably the latter. So I showed a stat in the piece that I wrote last week that was the value of all of the 750 unicorns in the world

combined is less than the value of Apple. And from a profit perspective, that makes sense. Apple's a machine. They must generate way more profit than all of those companies combined. So would Apple's bonds kick off $5 million a day? Apple's bonds kick off $5 million a day. Apple's bonds kick off $5 million a day.

There you go. Think about how many startups they could fund with just the interest. Exactly. Apple was a startup at some point. Amazon was a startup at some point. Facebook was a startup more recently. Pinduoduo is a $150 billion company

that was a startup in 2015. So there's these like really big opportunities. And the venture world is still, I think, I mean, tiny compared to the public markets. You really think it's still that small? I think it's that small. And I mean, I think the other. I guess statistically it is that small. Statistically it is that small.

And then I think the other, the other thing, and I'm trying to figure out, like, because I'm spending a lot of my time, a lot of time in my own head thinking about like, am I just being an idiot investing hard into a time when there's the most funding, and I'm trying to figure out, because I'm spending a lot of time in my own head thinking about, am I just being an idiot investing hard into a time when there's the most funding, when valuations are higher than they were before? You don't get to pick your time. You don't get to pick your time, one. And two, I think one way that I'm thinking about it is that Marc Andreessen wrote

Software is Eating the World a decade ago. And I think one kind of tweak on that is that it's turned total markets into total addressable markets. And like, that's a basic sounding thing, but I was talking to a company that does, it's essentially a marketplace for photographers, right? Each photography firm in the country on average has 1.25 employees. There's a bunch of these tiny businesses and then one company, it's a huge market. And then one company can come in and like take a bunch of, you know, a little piece of all of that. And you look at every little vertical. I never would have thought of photography as, as one. And you look at every little vertical,

we're going to space. I talked to two space companies today that are doing like in the next year, commercializable things in space. Let me ask you about this. So obviously the fundraising was not difficult, right? It's all inbound. You'd have to sell anybody if they want to invest cool, if not like you'll move on. But when you're talking to companies like this on the other side, when you're, you're the investor, what type of questions are you asking? So, I mean, it really, really depends. Well, why do they want, if, if everyone has money, why do they want yours? You can ask all the questions you want and they might be like, dude, we don't need your money. Right. How do

you do that? A hundred percent. And that's why I keep the fun size smaller because they're happy to have, I'd say for a couple of different reasons. Like if I want to be, you know, if I want to be honest, it's because, you know, I, they have either read and liked what I've written and it's changed the way they think about the company in a little way, or they want the call option in the future of me writing something about them or, um, that's right. Or, you know, he's, he's packing McCormick. That's the answer to that question though. There's that, like, I've, you know, I've, I've run a big 150 person team at

a startup before the company did not do particularly well, but like, at least I have empathy there. I think people can tell at this point whether or not they like me from, you know, reading it. And like one of the things you want to optimize for your cap table is not having assholes. So let me zoom in. So what I meant by that was, if you did 16 deals this month, you're not spending days with each individual company. So you only have a limited amount of time with these people to be on the call with them. What do you want to know about these companies?

What's the most important thing? So it really depends on the type of company. Today I talked to a medical device company and two space companies. What it comes down to in a lot of cases are what the unit economics are, what kind of contracts they have signed in all three of these cases.

They're live and testing and whatever, but not generating revenue yet, but they have contracted work for the future. So looking at what kind of contracted work they have and then what the unit economics look like when those things happen. Frankly, a lot of people are – I do all of my own diligence on this. I was actually talking to a friend about this today. We were both looking at the same medical device company, and I was like, oh, yeah, I committed on the call. The guy was great.

He was – I don't know what their unit economics are. A space company has no clue how much they were going to be able to sell whatever they're making for it. You want to say, well, you can look at for, you know, in this case you can look at it's doing space manufacturing and you can look at the cost per gram to get something to space and the cost per gram to manufacture the value of this thing on a program basis. And like, there's two curves that intersect, and it makes sense or it doesn't. But for the medical device company, I was talking to a friend who was also looking at it, who's also not a medical professional this morning, and he was like, yeah, I really like the company.

I just need to do some diligence and blah, blah, blah. I was like, I am not going to get smart on cardiology in 24 hours. So it's the other investors. It's other investors. This came in through somebody who I know who is a founder in the medical space who's also a Teal Fellow genius. You know, in some of those, I'm

happy to follow people that I really, really trust in a space that they know really, really well. So we think like venture or whatever stage or, you know, early private is the only investment in the world that you can make where it's like tell me who else is investing. It doesn't work like that in public markets. If Buffett owns 4% of the company, who cares? What if I said that actually might be the only way a person without 50 analysts on their team

could actually do it? And almost like, almost like you have to say like, all right, I acknowledge these are startups. They're not all going to work, but I feel like I stack the odds in my favor. If people that have 200 exits in their career are in this versus if they're not. And even if I could own less of that, I think it's a more conservative bet. A hundred percent. And think about it this way too, which is, you know, your point on Buffett is true. And also like Buffett announces that he's in something or people look at 13S for a reason. Like the stock moves on that, but it gets arbitraged away fairly quickly. Not as much as it used to, but yes.

This, you have this two-week window after a lead has come in where you know who else is invested. You know their expertise and track record in the space, and you can say, cool, I'm down to follow a trade, these guys. The thing that I'll look for always is if I like the founder and I like the way that they think

at least about the unit economics and they think about the market and they think about their distribution and all of those types of things. So there's definitely that piece of it, but if that matches and then there's a good investor and that I know well and trust, then, you know, I'll- Would you ever make an investment where somebody that you really respect is in it, but you think the idea is stupid, but you say to yourself, you know what, they're going to find a way to make this not stupid. Would you ever do that? Not based on the investor finding way. If I think the current iteration of the idea is stupid and the founder is just an absolute animal and we'll figure it out, like that's a bet that I would make in some cases.

So you're really betting on people, both who else is investing and who is running this thing. It's almost, it's to me, it sounds like that's like 80% of the bet. Well, Paki, you've seen this on AngelList. Like when you have like big name investors that get like snapped up in like 11 minutes. A hundred percent. Yeah. And those investors make, you know, like Benchmark or somebody makes a very few number of investments a year.

And so if you see like this firm with all these people that's done so well is making 12 investments this year, it doesn't guarantee anything, right? But it gives you a better chance. Let's look at the opposite of that. I read all the fintech announcements. The funding round, I have investments in some of them, not a lot of them. The ones that I have investments in, I tend to also be a user of the product. That's just how I work.

It doesn't have to be that way. It's just worth that way. It doesn't have to be that way. It's just worth that the way. Nobody else wants my money. So, but I read all these news announcements when they raise money or when they do a transaction or when they hire somebody. And it's the same like 10 venture funds in every one of these press releases.

And I said to myself, do they ever say no? And actually, this is not to like put anyone on blast. I said to myself, do they ever say no? And actually, this is not to like put anyone on blast. I'm sure they know what they're doing. I don't think I've seen a FinTech announcement where 0.72 wasn't in it. Like, I really don't think I can think of one. F primes in a lot of them, which is fidelity. And they're all smart, right? They know more than I know, but I really don't think anybody says no anymore. I think what everyone's doing is just spray and pray. Some of these, we can't tell right now, but I really don't think anybody says no anymore. I think what everyone's doing is just spray and pray. Some of these,

we can't tell right now, but we just want to be in everything. So we talk to everyone. Is that valid? Valid ish. I think. It's a valid way to carry yourself in this space. I think what you don't see probably is the number of companies that those

guys look at that they don't. So you see the companies that they do invest in. I don't know the denominator. I know for a fact that even just to get on a call with the founder, I have to think that the idea makes sense. I have to think that somebody else isn't doing it better. There are spaces where I do know the spaces very well, and so those ones I'm doing definitely a lot more of my own diligence. And then there's others where like, if it gets to me coming from healthcare,

like there must be something pretty special about it. But in spaces that I know, I see 10 deals before I even take a call with somebody like see 10 decks. The denominator is larger than, than I maybe see just looking at the surface of the results who gets funded. I think that's true. I think it's more cooperative. And so like, I don't care about my alpha versus Turner, for example, in this case. Oh, Tiger Global is now on every single press release. It's another firm that looks like they just say,

yes, well, who cares? What do we have to lose? Then you look at a lot of companies that they're in. They're in a bunch of good companies and they're chasing a lower IRR target than a fund that makes 10 concentrated bets an year. You know who else gets into everything? Jared Leto.

That guy's an animal. I'm not even kidding. What was he in recently that I saw? That's becoming more and more common. Hopefully, you do so well that these companies become giant companies and some of the employees will have the problem of needing liquidity one day. And that is going to become, if this market is going to continue to grow, a bigger and bigger thing.

So there was an announcement last week or this week. Did you put this in pre-IPO shares are going to be big? Yeah. I 100% agree with you. Like I maybe feel more passionate about this every day. So Walter Bloomberg tweeted that Citi, Goldman, Morgan Stanley, SBV are going to invest in NASDAQ private market, which has been around for, I think a few years. Like this is, this is coming in a big way. Liquidity for employees that have been in a company for six years, companies are staying private for longer that

want to buy a wedding ring or want to buy a house or whatever the case may be. Totally. Robinhood is starting to get allocation in IPOs and give it to their users. So, I mean, I think probably what ends up happening, is just that the IPO pop gets traded down and the late stage- Because the ownership is broader before it even comes out. The ownership is broader before it comes out. More people get a chance to invest. So you're taking the bucket of retail people and you're taking the accredited investors kind of out of that because they have a chance to invest in the secondaries. So a lot of people in my side of the business, like asset management, wealth management, they refer to pre-IPO stocks as alternatives. It's not an alternative. It's the

same companies that you're going to own in three months. You're just getting a less liquid earlier version before the bankers decide what it's worth to the public. It's not an alternative. This is equity. It's equity. Equity is f***ing equity. There's different disclosures that you need to make, and that's probably the biggest difference. If I own Robinhood privately right now and they go public in two days, my investment didn't go from being an alternative to

whatever, a non-alternative. It's equity. So I feel very strongly about that and I didn't always. But we have to, like Michael and I, the way we run the firm, the way we think about the investing side, we have to adapt when the world changes. We can't say things were better the way they were. So there might be things that we don't like about buying pre-IPO shares for clients.

There is less liquidity obviously. There is more room for pricing abnormality obviously. But these were companies that would have been public in a previous era. And when I see $157 billion in a quarter go into this asset class, there's an equity return there, hopefully, positive return. But there's an equity return there that's being earned by somebody else. So we think we have to be there. We have a specifically we're doing it. And I'm doing this with my own money as well.

John, throw up the pie chart from Equity Zen. So do you ever screw around with their platform? You ever talk to these guys? I've looked at Equity Zen, Forge. I haven't made any investments. All right, so we like these guys. Michael and I gave them money prior, just personal money.

Let's see what happens. You know, it's not perfect, but it's like getting better all the time, and they're working really hard on this. So I don't know what any of these companies do. I know what Instacart does. I don't know what Indigo, Upgrade, Domino Data Lab, Headspace, Mathbox. I think they invested in Klarna. That's not on here. Oh.

But that's right. These are just the first eight, but Klarna's in Klarna. That's not on here. Oh. But that's right. These are just the first eight. But Klarna is in this portfolio. So as an example of how giant this market is becoming, they invested at Klarna at a $35 billion valuation, something like that. And I said to Josh, like, LOL, 24 hours later, SoftBank invested at Klarna at a $65 billion valuation.

So basically what we're doing, and so now making this available to some of our clients where it makes sense. But what we're basically saying is it's not an alternative. It's not meant to act differently than the stock market. They're equities. But if companies aren't going public as early as they used to, which – and we don't think that's going back the way it used to be. Then you can't just watch this happen and not try to figure out a way to do this for wealth management clients. So that NASDAQ news that you put in there,

that's like the first of, I think, 100 headlines that you're going to hear in the second half of the year. People looked at all these massive IPO gains and they said, why am I not part of that prior to the IPO? And the technology is now available for that to happen. So don't you think – so Citi, Goldman, Morgan Stanley, don't you think these were like driven by like client requests? Yes. Like we want shares before the IPO. Totally. Then the question is how do you get the shares?

So this is going to have to be a situation where the companies who have employees selling their shares in the private market, you know some of them don't want it and some of them don't care. You have friends that work in a lot of these companies. Aren't employees getting more vocal demanding liquidity? Not that they can make demands, but asking for liquidity? And it's become part of a program.

Once you get to a certain stage that you're able to sell X percent of your shares. Now, I guess one of the problems is a lot of these companies have an internal marketplace. Some of these companies have an internal marketplace where that goes first and that could still be the case. A lot of external people will bid it up more than the internal would or than a VC would or than somebody else would. And so maybe you want to go to one of these private markets because you'll get a higher price there. Airbnb is a good example of like there being a very vocal employee base that felt that they waited too long to go public.

And then 2020 happened. And of course it all worked out great in the end. But we didn't know that would be the outcome. And there were employees sitting there like, oh my god, this is 90% of my net worth. I was buying a house based on this. Why did you wait so long to go public? There's going to be more of that. So these marketplaces are a great outlet for that.

Totally. Imagine being a WeWork employee. Brutal. Brutal. On a matter of that, well, employee number one, it wouldn't be bad. He did just fine. But everybody else. Mike, let's keep moving.

What do you think? Okay. All right. I want to ask you what your thoughts are. China technology. Is this just uninvestable? And let me set this up so people know exactly what I mean by that. This is Wall Street Journal.

China sent regulators, including state security and police officials to DD Global, uh, which is the biggest ride hailing company in China, China, on Friday as part of a cybersecurity investigation. Regulators from – listen to this. Government units including the Ministry of Public Security, the Ministry of State Security, the Cyberspace Administration of China, the Ministry of Transport, the Ministry of Natural Resources. Hold on. I have to put on some hedging traits. Dude, they threw everything they had at this company,

and I think a lot of our listeners know the story by now. They warned the company, don't go public in New York, and that, you know, we're not sure about the data you're collecting, and then they did it anyway, which is, you know, not smart. You're not supposed to do that, yeah. You're not supposed to do that.

So anyway, Bloomberg followed this up, and they were basically like, Beijing's July 10th announcement that almost all businesses trying to go public in another country will require approval from a newly empowered cybersecurity regulator amounts to a death knell for Chinese initial public offerings. This is like a trillion-dollar thing that seems like – this affects companies worth $2 trillion, Chinese companies trading on foreign exchanges. That seems like it just got stopped in its tracks. How are people feeling about making Chinese-based investments in anything? Do you own Tencent? Yeah. Tencent is my second biggest public equity holding.

Would you have bought that today knowing what we've just seen? Would it change your mind? It depends on how efficient you think the markets are. Tencent's an interesting example because so much of their value, a lot of their value is WeChat, which is just infrastructure in China, both in terms of messaging platform and something that a ton of other apps are built on top of. But then a ton of the value is in this incredible investment portfolio that they have,

including a bunch of Chinese and non-Chinese companies. They still own 5% of Tesla. They own pieces of Spotify and Snap. They own part of the Warner Music Group that Ackman was trying to take a stake in or will take a stake in. They're all over the place. And then like Pinduoduo and Meituan Dianping,

like a bunch of the big Chinese companies they own as well. And so it's really interesting to think about what would even happen in a situation like that. What you'd even be able to do as a Chinese regular. And they actually don't trade on the NYSE. Alibaba, obviously, is like the poster child. They're pink sheets because they don't conform

to our accounting. But so is Hershey. So is Nestle. There are other giant foreign companies that are the same. Yeah. But Alibaba, for example, traded in the US

and then Jack Ma disappeared. They took down the Ant Financial IPO. And so it's a risk. I think some of these are incredible companies. Like Pinduoduo, I keep bringing them up. I'm writing about them this week. But just like growing – like at levels that are unprecedented. That's the double-edged sword.

They have two billion consumers, but they change the rules if you piss them off. And so the China bulls – and I have friends who are like on the other side of this. And the China bulls would say, don't worry. Alibaba, all these companies are going to fall back on a Hong Kong listing, and US investors will end up with an ADR. It will be an exchange. They'll still be investing in the company. They just can't do this Cayman Islands VIE shit, which the Chinese government doesn't like. shit, which Chinese government doesn't like. And PS, they're never going to conform to PCOAB accounting standards, and they're not going to answer questions of the New York Stock Exchange.

And then you just say like, well, I own ADRs elsewhere. So, you know, why not? So like that's, I think maybe the sanguine view of this, but I feel like a lot is changing very quickly and it's not going to be quite so neat. A hundred percent. I mean, 10 cents also down from, you know, 90 to the high 60s. So I would buy, I mean, like non-investment advice, obviously, but personally I would buy more here. Like I think a lot of this fear is being priced in. Because it's overblown. Maybe. Like I think it's at least blown. It's blown enough. It's blown enough.

It's down more than 20%. And the business continues to grow. Its holdings continue to get more valuable, all of that. And so at some point, there's a price at which the risk is worth it. And the money's not just going to disappear. And so there's a price between 90 and zero. To your point, we have Russian oil companies. They're four times earnings, but you can buy them.

Yeah. You know, and that's a lot of that is the risk being priced in that one day somebody wakes up and confiscates the assets. That's why it's four times earnings when BP trades at 12 times earnings. There's a reason for that valuation, but you can buy it if you think maybe it should be six times earnings. That's a 50% appreciation in the stock with no fundamental change in the company. 100%. So that would be that kind of bet.

But I don't think these stocks are quite that cheap. They're not quite that cheap yet, but they are some of the most impressive companies in the world. And so it'll be interesting to see where this all goes. What do you think about all this? I have nothing intelligent to add. Nothing. So add something anyway.

No, let's just move on. So, all right, Paki, you spoke about getting all these meetings on your calendar. And there was an article in the Journal this week talking about this, like, this could have been an email type thing. I think that the pandemic created Frankenstein calendars. And listen, this is not me, but I totally get that some people are regimented, right? Like they need their calendar. They're super busy.

If you're trying to get a group of people together, you need a calendar, right? Like I totally get it. But when I get like, hey, I would love to talk or whatever, whatever. I just say, here's my phone number. Call me whenever. If I miss you, I will call you back. I don't want a scattered calendar. You're playing in a very different world.

This image is great though. Like this is what my shit looks like. That looks like anxiety. I don't write catch up. Mine is more like go to the gym, you're fat. Like I'll have that at 7 a.m. on my calendar. What does your calendar look like? Are you one of these people?

My calendar – You're probably forced to because of who you're talking to. My calendar is an absolute disaster and I'll put like no meeting blocks on it and then the day before I'm like, oh, I have three open hours for meetings tomorrow, which is why I ended up just working all weekend and writing all weekend. But yeah, I'm looking at my calendar now and it's nausea inducing. Like this is my first day in the city

since I moved back to Brooklyn two weeks ago because there's just so much stuff that there's not like a three hour window. When you stick something on Google Calendar, if you don't change anything, it defaults to an hour meeting. Like every item an hour the number one thing people should do is change that setting so that it's auto set for 30 minutes nothing should be an hour like with somebody that you're not actively doing business with i tweeted not even thinking about this conversation i tweeted

this morning that there's nothing better than when you don't agree on a time and the calendar invite shows up and it's either half an hour or 15 minutes and you didn't get hit with that hour meeting. And it's perfect. It's perfect. Yeah. The clock should be running. My bag pump here, the calendar that I use, VimCal, makes it a little bit better at least. Why?

It makes it easier to use. So do you use Calendly or any of that stuff? Calendly does not work well for me. I stopped using it. So Calendly, I don't like giving somebody my whole calendar and saying pick whenever you want. Yeah, I don't like that stuff. Calendly does not work well for me. I stopped using it. So Calendly, I don't like giving somebody like my whole calendar and saying, pick whenever you want. Yeah. I don't like this.

I can hit a, and then drag open spots and be like, all right, cool. You can pick something. Vimcal, V I M C A L. Okay.

Small, small. Calendly. You ever send somebody a link to make their own appointment. You don't do that, right? Never. But you can say,

choose between these click and then it's done. And so it's not like sending your whole calendar. It's just like sending the two slots that you want, but in a clickable way. I'm in the fortunate situation where my daily life is not like that. I just send someone my phone number. Just call me if I miss you. I'll call you right back. Yeah.

I mean, that's beautiful. Does that work? That's what I do. Oh, I have nine emails back and forth with somebody to set a time. That's the stupidest thing. Email gets a lot of the blame, I think, for being miserable. And the problem with email is that it ends up in a calendar invite or like trying to schedule something. And so every email that I get, I'm like, damn, this is going to end in a meeting, isn't it? And it always ends in a meeting. Yeah. I, I don't know

that I have a good solution for this for anyone listening, but I, I do, I do think saying no to a lot of stuff is really powerful. I am cognizant about that. Somebody called me back. I said, hey, is it cool that I sent that to you? I don't want to overstep my bounds, but you can call me whenever. I will call you back as soon as I can. Now, but if people are busy, you can't just call people randomly. So I get it.

Yeah. I've found that if you send somebody the Calendly link, oftentimes they won't even bother scheduling, which means they didn't even want to actually – like they'll put it off. They don't mean to not respond, but then they forget. It wasn't that important. Which means it wasn't that important, and there's nothing wrong with that actually. Like invite somebody to meet and then they don't really want to. It's great. Okay.

No problem. Neither side is upset when the meeting falls through. Oh, it's the greatest thing ever. Yeah. Yeah. No, I totally agree. We're going to get into this paycheck cycle thing. What is going on?

Like, is this a week? Is life as we know it about to change? I think I love this. I haven't given this. I don't hate it, but I don't know if I love it. All right. So we'll daily pay, like do a job from nine to five, get paid at five Oh one, replace two week paycheck cycles,

which when you say it out loud, it sounds very anachronistic that, that even is still exists. And then what do you think about like, does it, is it better for workers? Is it better for employers? Is it bad for the accounting department?

What do you think about all this? As long as it's just as complex for the accounting department, which in this case sounds like the software takes care of taking a two-week thing and splitting it up into one-day blocks and does it all automatically. If it's as easy for them, employers, I guess, cash goes out more quickly. So a little bit of a challenge there. Your cash gets, you get hit by 13 days or I guess an average of seven days. For employees, it's obviously better. Like it'd be pretty patronizing, I think, to take the other side

of this and say like, you know, it's actually better every two weeks or else those employees are going to go out and spend all their paycheck. But otherwise, like if you were deciding- Well, that is the argument, if you don't have to wait for your money and I just pay you each day, you know, people will tell me I live paycheck to paycheck. At least it's two weeks. I live day to day is not an improvement. So, but that's, I mean, like that is a, a person should be able to decide what to do with their own money. It's weird that the employer almost gets that float on somebody's, on somebody's income. If you design the system today,

right? Like if there had never been a paycheck before, if you design the system today, somebody would get paid every day that they worked. Well, that's what Uber did. They designed this system today. They pay you for the work that you do literally while you do it.

If you want to get paid every hour, damn it, you should get paid every hour. But you only get paid every minute. In the gig economy, that is how it works. Yeah. Like DoorDash, Uber, Lyft, nobody's waiting two weeks for-

Well, how about the- Like, honestly, I didn't read the article, but I think just when I saw the headline, I thought this was inevitable. Well, here's what it also does, though. It opens up this big can of worms about, should we even- I don't know what can of worms.

Should we even be thinking about 40 hour work weeks, eight hour days? Isn't that a vestige of like Henry Ford building assembly lines and the, and the lines having to run during certain times of day. Tracy and Joe's podcast. They spoke with that hotel operator. Yeah. We,

we talked about it the last week. It was great. But then the question is like, should employees be able to say, you know what? I understand the salary is for eight hours a day but actually i want to get paid when i do the work and i have five hours a day for you i don't have eight do you have room for me in your schedule and now you need software to maybe juggle twice the amount of employees who work half the amount of time each but what if i don't think I don't think that – I think it's more like you need to get this shit done in the next two weeks.

And I don't care how many hours you put in. Figure it out. That's a whole other conversation. Or if you are hourly, you clock in, you clock out. As soon as you clock out, the money gets transferred. Why not? Why is that so hard? Well, do you have benefits?

How do you calculate – like are you paying for part of people's health care? Josh, I read the headline. I haven't exactly thought of the answer to this. But I think that's one of the big things from COVID is that it's not just, is it remote work or work in an office? But there's like all these things that kind of get exposed when you're in your house. It's like, am I going to sit in front of my computer from 9 a.m. to 5 p.m. and work? Like it all seems silly.

And, Paki, you have this idea that people are going to have multiple – I don't even want to say employers. They're going to do multiple jobs. I think a lot of people – I think that happens now for a certain group of people do multiple jobs. I have three jobs. You have three jobs. Yeah.

You tweet and write and podcast and occasionally work here. So for certain people, they do do multiple things, and I think more and more and more and more, as soon as kind of the matching problem is solved, people who have particular skills are going to be able to come in. In fairness, we're not talking about us because we're people that could set up an LLC. We could like get paid as a corporation.

Here's what this is about. This is an Arby's in Missouri. Arby's location lists, quote, all caps, daily pay as the first bullet point in its job posting for a team member position. I love that. Daily pay, a startup recently valued at upwards of a billion dollars. Packy probably owns 5% of it. Says it works with some Arby's franchises to provide this service.

So they have a company, Daily Pay, that's enabling them to do this. They're advertising it. Come work here and we'll pay you the day you work. That might be unstoppable. It is unstoppable. It's buy now, pay later. The buy now, pay later model is absolutely brilliant because the consumer is not paying any interest because the conversion rate increases. It's the same thing here.

The conversion rate to hiring somebody increases, and so the employer is willing to pay that. It's great for the employee who's getting paid daily without having to pay any extra interest on top. And so when something like that happens where you can just take a loose funnel and turn it into a slightly tighter funnel and that's where the money comes from, that's amazing. So the guy daily pay chief executive is this kid, Jason Lee, who was great and almost famous as the lead singer. He said, quote, we're used to picking up the tab for a friend's coffee and immediately receiving reimbursement through services like Venmo.

He believes more people will start having a similar expectation of their employers as well. Totally agree. This is good SPAC. This is SPAC any day. I'll SPAC the shit out of this. DailyPay is a good SPAC name too. Yeah, I love it.

DPay. DPay is the ticker. Yeah. And there are others. There's a public company already doing this called Ceridian HCM Holdings, C-D-A-Y. And then it looks like ADP and Paychex are striking partnerships to enable this.

All right, so this is going to be unstoppable. And I do think it's going to change the composition of people's workday. So, Duncan, how many hours do you want to work tomorrow? What are you thinking? I don't know. Maybe like three. Tomorrow's a light day, actually, for us.

Yeah, yeah. But I do want you to stay here for even the hours that you're not working. You need to stay in the office. Yeah, just make sure you're sitting around. It's important to have presence. Yeah. Fair enough. I think this is going to be a tidal wave.

I don't see how you stop it. And I'm sure like most other big changes in society, there will be really good aspects of it and then some bad ones. And some people will choose to focus on the former, some people on the latter. All right. Is the internet making us awful? Too late. Or do awful people just use it more heavily? I really want to know what you think.

Or both. Is this me? It's not a riddle. Is it really shitty people who are on the internet the most? Or does the internet bring out the worst in the people who are on it? It's the latter. That's what it is? I think it's actually more the former.

So the obvious answer here is that you get points and people liking you and all of that for dunking on other people. And so people dunk on other people more than – On some platforms more than others, yeah. On some platforms more than others. But YouTube comments, Reddit, Twitter, a lot of these platforms, if you're public and you have some sort of thing associated with who you are, there's points for doing it. it. I think on the other side though, like people who are kind of like this

cranky just wouldn't have that many friends and like wouldn't interact with that many people. And so you don't know those people as much. 100%. But how about this? How many people are being exposed to a type of person that you otherwise would be unpopular? Guys, how many people are miserable? One out of 10?

Let's just go with one out of 10. Oh, it's too binary. There are people who are miserable two days a week. That's me. And then like, what's- That's interesting. You're laughing. You interact with me seven days a week. You know I'm- No, but my point is there's way- Oh, fine. Whatever. We can't quantify it. There's way more people that are not miserable than there are miserable people. Yet everyone, not everyone, a lot of people online are just dicks. And they're not miserable people.

And then you also lose nuance too because like the worst kind of person I think more than just an outright dick is like – The quote tweeter. The quote tweeter, the well actually kind of person is the absolute worst. But half of those people maybe in a real world interaction would be like, actually, I think that's a good point, blah, blah, blah. But when you have 280 characters to say that, like you're just kind of like, no, you're wrong. Here's Roxane Gay. She wrote an opinion column at the New York Times. This is how she breaks it down.

So she's like – she has influence. She's like not a – she's not a nobody. She's a somebody. But she's shocked at how important her stuff turned out to be online, like by the reaction, which I guess I could relate to. One person makes a statement. Others take issue with some aspect of that statement, or they make note of every circumstance the original statement did not account for, or they misrepresent the original statement and extrapolate it to a broader issue

in which they are deeply invested, or they take a singular instance of something and conflate it with a massive cultural trend, or they bring up something ridiculous that someone said more than a decade ago. But it's on and on and on. So people will, almost no matter what you say, it's obviously not good enough for everybody. But then the question is like, is that just inherent in these platforms? And human nature.

Michael Lewis always says like, people don't read the books he writes. Like people just interpret shit their own way. Yeah. But I think, I think, I think the internet just amplifies that a billion times. But then I think there are certain platforms where it's just self-selecting the type of people who thrive in one place wouldn't necessarily thrive in another. Totally. There are huge Instagram accounts that have no followers on Twitter. It's like people that go to sleepaway camp and are like super cool, but they're like total losers at home. Well, there's definitely some element of people playing a role that they see themselves as online.

Two weeks ago tweeted something like, I can't believe that Shopify is worth 11 times as much as Apple because the stock price is 11 times higher. And like, you've just missed so much nuance on the internet where that got out of my little circle of people who know me. And I had people, I think I had 6,000 likes and a ton of quote tweets. But how could that be misinterpreted? I know. Like how? So it's not, I don't think it's malice in a lot of cases. I think it's an easy opportunity to dunk. I think it's some people legitimately thought that I was just being an idiot. Like, you know, that one gave me a pretty interesting window into Twitter. Every time I think that, like, it can't get any worse in terms of somebody, like, clearly missing a joke, like, it's always – it never ends.

And it never gets better. I think – so I think the answer is probably a little bit of both. Extremely online people probably suck in real life. But then there's the nature of what gets amplified on these present company – Yeah, we're pretty awesome. No, I'm not saying all. I'm saying there are people that just like in real life, they're miserable and they take it out on the internet. Why wouldn't they?

They don't have another outlet, right? So I understand where it's coming from. But then I also think that there are aspects of these platforms that make a good person look like a bad person because they're having a bad day or they just don't know how to act. Totally, totally. And I'm sure I've made myself,

I've not done myself favors on any of these platforms at times. I don't think we're going to solve this today. You wrote like a 40,000. I mean, my God, sir, this actually, and honestly,

I don't even know what it is, but it's basically like, there's like something called like play to earn. Like what, what, what's going on here? Well, wait,

what's Axie infinity. Exactly. So start from the very beginning. Cause I don't think most people have heard of this. I hadn't really, I had heard it was kind of in my peripheral vision, but I hadn't really heard of it or gone deep on it until last week. Axie Infinity is a blockchain-based game where it operates a lot like Pokemon, except you own the characters as NFTs. And then you fight those characters against either,

you know, PVE, the environment, the computer or PVP against other players, or you go on these daily quests and you fight them in teams of three. They all have different powers. And then whoever wins gets points. And in a normal game,

you'd get points in a normal game. You know, today the most popular model in gaming, like a role, like a massive role playing game, like a massive role playing game where most of today's big games are like the free-to-play model, where it's free-to-play, but then you buy skins.

Sometimes it's play-to-win, where you can actually buy things that give you an advantage. Roblox, Minecraft, Fortnite, all those kinds of games. The interesting thing about this one is that you buy the Axie as an NFT, and then you own it. The company behind it.

What's an Axie? That's your avatar? That's your character? That's your character. And so some people have like huge groups of them. You need at least three to start playing right now. They go for probably to start. The floor is around.

Oh, these are so cute. $200. So cute looking. They do look like Pokemon. They do kind of look like Pokemon. But one, you own them. Two, the play to earn model is that in order to play the game, you need to get Axies. Who is this for?

Like five-year-olds or incels? Like who's on this platform? So there's probably some five-year-olds. There's probably some incels. Hold on. What's an incel? Involuntarily celibate. What?

Okay. It's a serious condition. Go ahead. So the biggest— Why do we have a record screech i've never heard of it all right go on really i feel like you've heard a lot of these things no i don't know any acronyms or anything i'm not i'm not in with that all right go ahead all right so the biggest group of people playing this game are incels are incels the second biggest group and i playing this game are incels. The second biggest group, and I'm kidding, Axie players are great. The biggest group of people playing the game are people in the Philippines, actually, who instead of working for $5 a day at a local shop or doing some sort of job,

they are coming to Axie Infinity, playing the game by completing quests, earning SLP tokens that they can exchange on Uniswap or SushiSwap or one of the decentralized exchanges for actual money. And so they play the game for hours and hours a day. This sounds super fun. They can make about $20 a day, right? So you can 4X what you'd be making in the country. And I mean-

Who the f**k has time for this? The difference, I don't even- How many words did you write on this topic? 8,200. Did you go to the Philippines to research this? The crazy thing about this and the thing that caught my attention is that in, what was it? April, it did $670,000 in revenue. Okay.

what was it? April, it did $670,000 in revenue. In May, it did, no, so May 670, April or June 12, whatever. This month, after making $670,000 in a month a couple of months ago, this month, it has already made $95 million and we're on the

22nd. Get out of here. LOL. What? Insane, right? And so they make money in two ways. When you say it has made, you mean the aggregate of all the players or the platform itself? The company itself. And the company only makes that on fees. So the aggregate volume is much bigger.

The company makes money in a couple of main ways right now. They also sell land in this universe and other ways. But the two main ways that it makes money are, one, there's a marketplace for these NFTs, just like OpenSea or NBA TopShot or whatever else. And whenever somebody buys one, they take a 4.25% fee. So that's one.

And the other way is breeding. And so instead of, you know, Fortnite, if they want to release a new skin, then Epic and Fortnite make a new skin or they partner with somebody and sell a skin to users. Yeah, I just got Space Jam 2 skins. Wait, 95 million? You just got Space Jam 2 skins.

Hold on, how many employees do they have? Is this like two? 40 employees. They have 40 employees. Team is co-founded out of Vietnam. And the biggest one is their breeding fees. So instead of them creating new axes, players who have them. I told you that in cells were part of this.

Tell me about the breeding package. These are cells. So the breeding is. These are cells. These are not cells. These are cells, right? How many users is this? How many users?

It's like five guys. This is – I think they've just passed over 600,000 daily active users. And so that's a whole other thing that they're onboarding. All these people who are not into crypto by any stretch of the imagination, they're onboarding them to crypto. So that's one interesting piece of it. The biggest way they make money though is through breeding. And to breed, you need to pay for AXS token, which is their kind of like governance token. It's built on ETH, but it's

built on Ethereum, but then they have their own side chain. So there, I mean, there's so much interesting stuff about this company, but they're vertically integrating. They built their own NFT marketplace instead of using OpenSea. They built their own side chain instead of using an Ethereum side chain, like a Polygon or an Optimizer or something. And they have this NFT marketplace to take fees on. And then when people breed, they have to use these in-game tokens. So the AXS holders ultimately are the ones who own the treasury that this revenue goes to. How quickly can they exchange that token?

Like that. So you exchange it. In-game or somewhere else? Somewhere else. And so they're going to do more and more and more. In-game or somewhere else? Somewhere else. And so they're going to do more and more and more.

They're going to actually build their own exchange to compete with a SuicideSwap or Uniswap where you just directly trade your coins. Right now you have to bridge over to Ethereum and then trade it on Uniswap, so it takes a little bit of time, but like 30 minutes or 15 minutes or however long that process takes. This goes more to your theory, though,

of the fact that if you want to be in this world, it has to be your whole day. Yeah, you can't do this on the side, right? But some people can, right? How? So there's some people who are playing. You can't be a doctor. There's some people who are playing to make a living.

You can be a doctor and buy Axie NFTs to speculate. You can buy to play occasionally. There are zero doctors buying Axies. I think so based on the reaction that I've seen from the comments, because this one got a ton of comments and a lot of the people commenting are people

who want scholarships. That's another thing. It's too expensive for people to buy their own Axies. So there are scholarships that are set up that essentially loan them out

and then take a cut on their earnings. It's this whole economy. It's a mirror facing a mirror facing a mirror. I have a test for these kind of things. It's called the grandfather test.

Think about my father's father. He woke up at four o'clock in the morning and unloaded fruits and vegetables from ships, literally in the fucking Bronx. Here's my test. I read 500 words on this. Here, five words. The Axie protocol generates revenue

by taking a 4.25% fee when playing. And I just say, would my grandfather punch me in the f***ing face if I told him? I never met him, by the way. He died before I was born. If I explain this to him, how many words could I get through before he literally knocked me out? And when I hear

terms like virtual real estate, like, that's it. Like, his fist would be cocked i know i i would be out f***ing cold when i told him i was buying real estate on a computer that doesn't exist those that fruit is now being unloaded in a lot of cases by machine like and virtual fruit he would f*** you up for that too i'll tell you right now but i mean like part of this too it's like you don't need as many physical workers for things and so like part of this is they want to run ubi experiments where they literally give people ubi here and see if they can find meaning by playing

the game and being part of the community like we are going to need to figure out new jobs for people to have as more and more it's automated did you ever see the pearl jam video do the evolution no okay a little before your time highly recommend it's animated it starts from prehistoric duncan you seen this your pearl jam guy no no idea nobody in this room has seen this i haven't john all right watch this on youtube later i'm not gonna get into it but i'm gonna get into it it starts in prehistoric times and it's the story of humanity the final frame as you can imagine is literally people with their brain connected directly to a screen and like there's just rooms and rooms and rooms full of people that's what it is it's what

it is it's what it's what that's where we're headed so uh pearl jam is very prescient i mean hopefully what they find is that you can find like because you have this controlled environment here hopefully what they find is that if you give people ubi they'll still stay engaged and stuff and whatever and then it doesn't all have to be screens you can give people ubi and they can go hang out in the countryside and whatever but this does give a nice sandbox to test economic policy in a way that you can't in the real world you understand why it's hard for like no most people you bet see you about see normal people you yeah a hundred percent a thousand percent like this seems wild to me as well.

I totally understand why this seems crazy, but I do think, like, I mean, one of my biggest beliefs and one of the things that kind of goes through all the not boring pieces is that shit just keeps getting crazier and crazier and crazier. You're right about that. And whenever you say, this is it, the next thing after it is crazy.

Everything we saw last year we thought was the craziest thing that ever happened and then it sure got crazier. Packy, stuff you were writing 18 months ago made no sense to me. I'm still like, I'm finally starting to learn a little bit. Like Matthew Ball's writing about the metaverse.

I read that piece in 2018, whatever. I was like, what the is this guy talking about now? And so here we are. But I still don't know how you learn about this in four days and write about it like a daily. Like, I don't know how you do it. Yeah, but what he's doing though is cumulative. He's not approaching a topic.

Not really. You just heard about it. Didn't you just, didn't you just learn about accent? But he knows about sushi swap from, from six months ago and unit swap and how one is different than the other. He's building upon a knowledge base. That's like,

um, cumulative. It's not approaching this topic fresh and then having to learn every aspect of it. Because then it would be 100% correct. Yeah, I wrote a piece in January. You're not that smart. You're not that smart.

I'm not that smart at all. So I wrote a piece in January about kind of the intersection of crypto and the metaverse when I knew nothing about the topic. And so that was really, really hard to research. That's your barrier to entry though. Because if Batnik said, I don't like Paki getting all this attention on the Axie beat

I want to wait in here and do my take Axie beat oh good luck because Axie is the end I was about to say

what the hell is Axie I know we were just talking about it literally sounds it sounds it sounds like it's the knowledge is cumulative

and now because you know like the founder of Geo or the founder of Axie Geo reads Not Boring and is always able to talk to him so that's cumulative as well.

And that lets you skip a lot of the knowledge and you can be like, all right, I have these 20 questions. Hopefully he doesn't listen to this podcast. All right, let's keep it moving. We're going to go to Soapbox now. By the way, I just noticed you're wearing a Bucks t-shirt. Were you happy with the outcome? Thrilled, thrilled, thrilled. You were, right?

So the story I kept thinking about really quickly, you and I saw the Knicks play at Fiserv Forum in Milwaukee. really quickly you and i saw the knicks play at fiser forum in milwaukee and the fan favorite from milwaukee is bobby portis who was on the knicks when we went so we were we were in the towel we were in the second row thank you tony stick thanks tony stick we sat behind the basket second i was shouting at every knicks player they were four feet away from me i was like alonzo alonzo trey there's nobody knows who that is. Bobby Portis was the only guy to look at me and give me a wink. With those like crazy eyes. Giant eyes.

Gigantic eyes. He gave Mike a look and like, because I think we were at Nick's stuff or? I was wearing their shirt. All right. So they knew we were friendly, but so Portis, by the way, I think we lost by 50 points that game.

Like Giannis just like, he was hitting the ball into the net with a golf club at one point but um bobby portis is like the fan favorite so it's cool to see that because we saw him there i don't know where it's going with this all right uh what's something you think everyone should be paying more attention to or less attention to i just wanted to share this i don't i don't know if you guys have a big reaction to this. We are still underestimating the power of the web. Still, after 25 years, we still have not fully grasped. What do you mean? How important it is for just everything.

This is from Squarespace. And I know you love surveys, Mike. He did a big study of Gen Z and millennials. And I didn't know those were two different things. I did, but anyone younger than me is a millennial. All right, 60% of Gen Z and 62% of millennials believe how you present yourself online is more important than how you present yourself in person.

So more than half of people think your online presentation matters more. What else did they say? Real quick. One in two Americans say they can remember the color of a website better than someone's eye color. 71% of millennials agree. What a weird question to ask.

No, meaning the impression that you make with a website is more important than the impression you make face-to-face, which I don't think my generation, like young Xers, agrees with, but I can see that it's trending in that direction is number one. Last thing here, 44% of Gen Z and 39% of millennials think they make a better impression online than they do in person compared to 21% of Gen X and 8% of baby boomers. That sounds low. I'm definitely better online than in real life.

Yeah, I would agree with that. What was I going to say? Oh, Gen Z are more likely to remember off the top of their head the last website they visited, 43%, than their partner's birthday, 38%, or their own social security network, 31%. You know why this service is bullshit? 0% of people remember the last website they went to. Really? You know the last website you went to? Well, I mean, technically I'm on one right now. I have 19 tabs open right now. I went to ax really you know the last website you went to well i mean no way technically

i'm on one right now tabs open right now i went to axi world.com all right enough setting up his axi all right i think uh anyway the last thing i want to say on this we are still underestimating how powerful it is to build a web presence and And like, it almost is taking the place of needing to build any kind of physical presence anywhere. And the ramifications of that, I think like are in every facet of life. So I'm still shocked by. And you're bringing it full circle back to the first conversation that we

had about the amount of dollars flowing in to venture. Yeah. Like, I think that to me is why, you know, that prices are obviously high, but I also think there's just still so much room ahead and that explains a lot of why the money's coming earlier.

So I totally agree. That's a big factor there. All right. I want to talk about narrative. So Durant's like literally, if his shoe was an inch smaller, the Nets would probably be the champions. The coach of the Bucks would have got fired.

And we would be talking about Giannis like this, who he is. He's just not the guy, you know, he's a great regular season player. And that was a month ago. Oh, that's yeah. That's, that's wild. So I weren't watching that game and don't know what you mean by that. Explain why the length of Durant shoe literally changed all of our opinions. know what you mean by that. Explain why the length of Durant's shoe literally changed

all of our opinions about Giannis. So Durant hit a shot to tie the game. Versus the Bucs. To send it to overtime. And his shoe barely was on the line. If he was an inch behind and they would have won.

They would have won the series. It would have been the best game. The Nets would have advanced and the Bucs would have been the best game winning shot of have been the Nets would have advanced. It would have been the best. And the Bucs would have been the best. It would have been the best game-winning shot of all time. I don't know about that, but up there. And we would be talking about Giannis very, very, very, very differently. Now, today, he's the best player in the world. He doesn't have what it takes.

Right. He's not a guy that can take you all the way. And it would have been justified. Dude, he might have left Milwaukee. Like, it would have, well, it's just on the extension. But it would have been justified justified that conversation that we would have had. And now because of a different series of outcomes, he is the best player on the planet.

And you could quibble, maybe it's different, whatever. But just the, the, the idea that like, just what a, what a moment that things could be so different from something so little. And then just like, also like how many things are affected in the future by such a minor detail like that should really humble all of us, I think like about our successes and our failures.

Dude, that's like, that is my story too too because if Mario Chalmers did not, and speaking of basketball, if Mario Chalmers did not hit that shot in 2012 against the Knicks to put us down like 21, I would have stayed at the game and I never would have met Josh. Right, fair point.

Do you have any stories like that, like near misses? You've heard like the 9-11 stories, the reason why the guy couldn't make the flight and it was so trivial. Do you have anything like that? Or you might not even know that you have things like that. I don't think I know that I have things like that. But you definitely do because everyone does. Everybody does. So you guys have things like that. I don't think I know that I have things like that. But you definitely do.

Cause everyone does. Everybody does. So you guys see the meme or I don't know if it's a meme, the image of like the different paths that your life could take. Like, it's just, it's pretty cool stuff. All right,

Paki, what do you got? So a lot of people would react to that just by like going full, full fledged into God's plan. Like all of this is happening for a reason. They can't accept that randomness. I go the other way. I'm all the way the other way.

Did you ever see the butterfly effect? Yeah, I love that movie. Maybe think of that. Where like minor things change and like the outcomes are so wild. The Simpsons had a great episode of that where like Homer kept going back in time. He stepped on a lizard and then came back in the future and the whole world was upside down. lizard and then came back in the future and the whole world was upside down so i yeah listen i just i don't i'm not comfortable with the idea that things can randomly change the future so much but i know it's true i'm very comfortable and uh it's a good point all right pack you got

a soapbox got a soapbox we're going right back to nfts all right next good can't get enough what you all right they're not dead i agree they're not dead, but they're in an NFT winter. Is that the term that I've heard? The NFT winter thing, but I mean, I think Axies are a good example. OpenSea, which is the big NFT marketplace, just raised $100 million from Andreessen Horowitz at a $1.5 billion valuation. And I think the point that you just made

about how people view themselves online and how online appearance is more important than offline appearance for a lot of people is a really interesting point in NFT's favor. So there's companies like Artifact, which make like, you know, NFT shoes that you can put on top of your body and put in your Instagram picture.

And if a lot of your presence is- But it's not an actual, you don't get the shoe? You don't actually get the shoe, but if a lot of what you- With physical NFTs? No, dude. No, it's like a digital NFT. A digital image of a shoe onto your picture.

Or they have like clothes or whatever. I feel hip. And like if you care more about your online persona than not, and you care about the environment and so you don't want to waste clothes to just take an Instagram picture, why not buy a digital version of something that you can show off on your Instagram?

I need like a digital collared shirt. Put collars on those t-shirts. There you go. Can A16Z single-handedly will something into being a thing? Can they invest in something like OpenSea, which from my perspective, it looks like a lot of the interest has collapsed. And I'm not saying that means it's dead, but are they influential enough that by writing that check, they will attract enough people to come back to that and revive it or reinvigorate it? Or am I overstating how powerful one VC can be? I think you're probably overstating how dead it is on the one hand. Okay. And then on the other hand, I think what they can do probably more is attract talented people to OpenSea.

They can attract crypto insiders to OpenSea. Like, hey, this thing's still going. This thing is not only going, but you've only seen the tiny version of the vision. And here's the huge vision. And that's what A16Z believes in. And so I think that's what they can help with more than the general public. Although the crypto community is really small, so they can also kind of bring people back in. They have a great reputation there.

You and the Sox are still $50,000. Exactly. Jeez. What about, I'm looking at CryptoPunks right now. Zed just raised at a massive valuation in the horse racing game. That's also very cool. And it's kind of actually like where you own horses

and then you can breed them. The lowest CryptoPunk is $41,000. And the really cool thing about that- I like to sit in my basement late at night and watch my virtual horses breed that's my big thing you pay extra for the version where you can actually watch it he doesn't get it

how much of this shit is just like trying to keep enough activity going until somebody comes along and figures out the real thing that a billion people go yes I need that everybody would admit that they're iterating to kind of bigger like more kind of general use cases like digital kids digital kids i mean yeah why

would you want the environment with an actual kid 100 nft kids finally finally i've convinced you guys no but i do think that everybody agrees that they're iterating to kind of more and more but i feel like they're waiting they're like let's just keep this alive until somebody makes the jesus nft like the thing that everybody wants and that i concede that that's probably what's going to happen eventually but also crypto punks is is like an interesting one or something like a crypto not big enough and it's not that but like they'll start making and they'll do this with axi too but but they'll start making movies and Netflix shows. And maybe if you're one of the owners of one of the best CryptoPunks, you'll get paid royalties because your CryptoPunk is in the thing. People are already creating content around their individual CryptoPunks and negotiating one-on-one deals. This stuff's not going away.

It's not going away. And think about Disney. But it cannot go away but also remain very beneath the surface and not important also. It could be just a cult thing that goes on but doesn't really matter to most people. I'm not saying that will be the case. But I do think when it starts happening that there is a CryptoPunks show and people who don't care at all about NFTs start watching it. And they're like, wait, people own these things? And so instead of like Mickey Mouse, which Disney owns, there's a guy in a

basement somewhere who owns that CryptoPunk and he's making money off it. If they make an alien movie with CryptoPunks, I'll watch. There you go. Alright, fair enough. Let's go into, let's finish out with favorites. The best thing you've read, watched, listened to, etc, etc. I have to

start up on Netflix. I finished the first season. Apparently this was on a channel called Crackle and they were making this show. Show's dope. And the actors are really good. And the guys, what's that guy's name? He was in the British office and the Hobbit. And now he's part of the Marvel Cinematic Universe. You know that guy? Marlon Brando. Yes. Nailed it. Well, he's like one of the main guys, and then the kid from the OC is in it. Yes. Seth. And it's just good.

I was like surprised at how good it was. Wyatt, did you watch it yet? When did it get good? Because my wife made us stop watching after like half an episode of the first episode. No, no, no. Pick it back up. It gets good halfway through the season, but the whole thing is about terminology that you are swimming in.

Literally, it's Bitcoin, crypto, the way the real world interacts with that stuff, and it's right up your alley. I'm surprised you didn't finish it. I don't want you to tell your wife she was wrong, but maybe secretly go back to it. If you're listening, you were wrong. Did you watch this?

You haven't seen this? No. Okay like it the other thing is i'm not even talking about the music i thought the album covers for john mayer's new one are genius i love shit like this first of all you guys are too young but it looks like a record that you would see in 1988 at like tower records and i like how the sticker on it for spotify is green and then where's the other one look at hair yeah well he's going for something he's got a mullet he's going for like where's do we have the apple one too i don't know if we have that all right so he but he's going for like a vibe i think nostalgia is very big right now and people people want to be transported back yeah there's dude i want to go back i swear i want to be 11 people want to go back to uh people want to be transported back. Yeah. Dude, I want to go back. I swear. I want to be

11. People want to go back to a, people want to go back to a, an earlier, simpler time. So I think he kind of nails the mood right now. I listened to this once. I'm a rap guy, but it's a very vibey record. I think people would like it if they tried it. And if you're a John Mayer fan, you don't need to tell me that, tell you that. All right, Mike, what do you got? All right, I listened this morning to Ryan Russillo interview Dan Patrick. It was so good. Did they talk about sports? Did they get to that? Dan Patrick told a story where he used to interview Michael Jordan

after the finals every year. And so Michael Jordan came in, did the quick interview, and Dan Patrick said, it's a shame you're retiring. And Michael's like, why do you say that? He said, because I wanted to play you. And he goes, how the f*** do you guard me? Get up right now. And Dan Patrick's like, he's like, I'm interviewing Phil Jackson in like a minute. I got to go.

And Michael was like, no, get up and show me how you would guard me. And this was like literally right after they won the finals. I don't think it was like a week later. It was like after the game. It's like 10 minutes after the game. He's such a psychopath. Like the competitive, like, I don't know. I mean, anyway, the entire interview was great.

I got to listen to that. Lunatic. Shout to, shout to Ryan. He's, he's got one of the best podcasts out there. Love listening to his, his listeners. Life advice. His listeners who write into him are absolutely hilarious.

All right, Paki, what do you got? I'm going to go with another Netflix show, Never Have I Ever. Have you guys watched this? Not yet. It's so good. So it's about this Indian high school girl. Pitch me, why should I watch it?

Indian high school girl. So there's bonus points for us because my wife's Indian and so there's a lot of jokes that we get, but it's also just like very funny. It's one of those, if you like high school drama type shows, it's like one of the best done versions of that I've ever seen.

Season two just started on Netflix. I got like halfway through episode one and I started getting sad that I was running out of the season already. It's just like when you have a show like that, it's a good sign. Exactly. You're like, wait, how many more are left? Exactly. Maybe I should conserve this.

We slowed from two a night to one a night for that reason. Can I just say one thing? I like half a second thought about tweeting this the other week, but I didn't really want to get involved. I think curry is like the most underrated thing on the planet. Even though there's like a bazillion Indian people, I feel like in America, we don't eat enough curry.

We don't eat enough Indian food in general. That's a hot take. I mean, my wife doesn't like it. I love it. I need to have more of it. What's amazing – so I spent a year pretty much during the pandemic. Is she Indian-American or from India? Her parents are from India. She's Indian-American.

So her parents cooked that like good shit. How did they tell you? There's like a million different types. It's not just curry. A million different types and they're vegetarian. And so I – Yeah, what's American food? Can you imagine?

Yeah. I eat vegetarian every night and I loved it. And like, that's how good the flavors are, I think. Okay. All right, so you have two. So you have Never Have I Ever and Indian food. Love Indian food. Michael joined you on it.

All right, did you have fun today? More importantly? I think I might've even had more fun this time than last time. Dude, an hour and 15 minutes went by. You haven't funded anything. I need to do this more often. I'm worried that there are people

waiting for emails back. He has 17 calendar requests. I probably do. We're going to bring you back here as often as you'll come back. You're the man. We love having you. I want everybody to go to Not Boring, which is Paki's sub stack. He's got 62,000? 63,000 now. 63,000

subs and every one of them well-deserved. Every one of them being inundated with brilliant insights. Are you bi-weekly now? What are you doing? Sometimes bi-weekly, sometimes once a week. I mean, dude, the level of stuff that you're putting out is ridiculous. I don't know how you do it.

So check out Not Boring and our friend Paki McCormick and follow him on Twitter and AXI and OpenSeas and all the platforms he's on. Don't forget, check out youtube.com slash thecompoundrwm so you can watch some of the clips from the making of the show. Always a lot of fun. Thanks so much, John. Thanks, Duncan.

We love you guys for all the work that you've been doing on the show. And if you guys are into podcasts, don't miss Animal Spirits every Wednesday morning. And don't miss, when are you doing Talk Your Book? Mondays now? All right. I'm done plugging stuff. We'll see you guys next Friday. Have a great weekend. The Compound loves you. Pretty good. Look at the timing on that too. I'm like almost a professional at this point. pretty good look at the timing on that too i'm like almost a professional at this point 523 bang thanks again to our sponsor masterworks go to masterworks.io compound for more information